Question

INCOME STATEMENT
Net Sales	$10,000,000
Cost of Goods Sold	$4,000,000
Gross Profit	$6,000,000
Depreciation Expense	$1,600,000
S&A Expenses	$1,368,000
Operating Income (EBIT)	$3,032,000
Interest Expense	$2,700,000
Income before Taxes	$332,000
Income Taxes (42%)	$139,440
Net Income	$192,560

Goodyear Tire & Rubber Co has the income statement shown above. What is the Net Profit Margin? Round your answers.

Answer 1

What is the Net Profit Margin?

Answer: 1.93%

Workings

Formula for calculating Net Profit Margin is as follows;

Net Profit Margin = Net IncomeNet Sales*100

Net Income     = $192,560 (given in the question)

Net Sales         = $10,000,000 (given in the question)

Calculation of net profit margin

                                    = ($192,560 / $10,000,000) *100

                                    = 1.925%

                                    =1.93%